More than 7.2 million people have gained Medicaid coverage since the Affordable Care Act's marketplaces opened in October an impressive number, considering that only half of states (25 plus the District of Columbia) have opted to expand their Medicaid programs as called for in the ACA. These figures, which represent the end of June 2014, exclude Maine and North Dakota.

The Medicaid expansion numbers announced last week by the Centers for Medicare & Medicaid Services show that most of these 7.2 million new Medicaid members are working adults with low incomes. The results are stunning: 1.7 million of the new Medicaid members live in California. Nine expansion states have seen their Medicaid enrollment expand by 30 percent or more (Arkansas, Colorado, Maryland, Nevada, Oregon, Rhode Island, Vermont, Washington, and West Virginia).

The CMS numbers, when applied to estimates of the uninsured, also show a widening gulf between the expansion states that have broadened Medicaid to cover virtually all those below 138 percent of the federal poverty level, and those states that have not. In expansion states, the numbers of uninsured have fallen by an average of 38 percent since September 2013, while in non-expansion states the reduction has averaged just 9 percent (What Is the Result of States Not Expanding Medicaid, Robert Wood Johnson Foundation and The Urban Institute, August 2014).

The new study by the Robert Wood Johnson Foundation and The Urban Institute estimates that the non-expansion states could reduce their ranks of uninsured by 6.7 million if they expanded Medicaid coverage, sending $423.6 billion in federal funds through their healthcare economies (hospitals, physician offices, pharmacies, other providers) through 2022.

These differences are being felt in the economies of the states and the strength of their healthcare systems. The most easily quantifiable difference is in the financial health of hospital systems, as the amount of uncompensated care at hospitals has dropped in expansion states by 30 percent or more (reported by Tenet Health and the Arizona Hospital and Healthcare Association). The predictable outcome of this for health plans will be stable or even declining hospital reimbursement rates within expansion states, versus fast-climbing hospital rate increases in the non-expansion states. The ensuing outcomes will include lower insurance premium increases in expansion states, greater health-sector employment growth, and higher pharmacy utilization.

That's not pie-in-the-sky, ACA feel-goodism. It's happening. The healthcare industry and the economy have been changed most profoundly in the expansion states.

But there are opportunities even in the non-expansion states. Retail giant Wal-Mart is counting on large numbers of uninsured people to come to its new in-store primary-care clinics it is piloting in non-expansion states South Carolina and Texas. Offering physician visits for $40 in cash, up-front, these clinics are tailor-made for the working uninsured those people who, if they lived in an expansion state, would have Medicaid coverage. As Wal-Mart did when it pioneered the $4 generic drug phenomenon, the retail giant is using its staggering economies of scale to serve the primary-care needs of Wal-Mart's customer base affordably.

The politicization of the ACA, of course, means that all eyes remain on the November elections, where the potential exists for the GOP to take control of the U.S. Senate and ultimately repeal the ACA. If that happens, most of these 7.2 million people (most of them living in Blue states) would lose their Medicaid coverage, and more than 5 million more nationwide would lose the subsidies that made their exchange-based health plans affordable.  As business and political leaders crunch on that economic and political calculus, they may find that the constituency created by the expansion of Medicaid is far larger, and more influential, than 7.2 million working, low-income adults.

 

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